STAFF NEWS & ANALYSIS
National Basic Income: A Bad Idea on the Rise
By Daily Bell Staff - December 07, 2015

It Begins: Desperate Finland Set To Unleash Helicopter Money Drop To All Citizen … Finland is considering giving every citizen €800 a month. Proposals for a national basic income are intended to simplify the social security system and encourage more unemployed people to take on temporary work. – ZeroHedge

Dominant Social Theme: Let's turn central banks into a force for good by printing money for everyone.

Free-Market Analysis: Long ago, we identified the idea that central banks could print money for everyone as perhaps the single most pernicious myth of our modern era because it gave the masses a further stake in a ruinous system.

Central banking provides the beating heart of regulatory democracy. If you don't like what Western democracy has become with its serial wars, corrupted science and increased societal degeneracy and malfeasance, then you won't appreciate the imposition of national basic income that will inevitably garner more support for a system that is going to die one way or another.

Of course, supporters of central banking are almost certainly going to support a "basic income" because it will generate support for central banking and allow the system to linger just a little longer. Ultimately, it will still fail, though. The only question is how chaotic and ruinous the failure will be.

We have been viciously attacked for exposing this particular meme because so many statists are invested in it. But we persisted in writing about it and tracing its antecedents because it is so important. It is central banking's "last stand." Exposed and shamed, central bankers and those who stand behind them will now begin to offer the "benefits" of the system to a larger circle in order to rebuild public support.

Long ago, we identified the crackpot 1930s economists that supported the idea of a national income and tracked the emergence of the concept to the English Fabian Society. The Fabian Society is dedicated to creating socialism by building its foundation incrementally and cementing its progress piecemeal but in sustained campaign. The piece de resistance is what ZeroHedge refers to as "helicopter money."

To understand helicopter money, you need to understand the terrible simplicity of central banking: central banks print the money that governments spend. They create it out of "thin air." But ordinarily, the money printed by central banks is lent into the economy via commercial banks. It is done this way so that people don't realize where the money comes from.

Since banks lend the money into the economy via businesses, people don't question its origin. The brains of hominids do not in the ordinary scheme of things look past even a single veil let alone two or three. (This is why one should always be skeptical of buildings with elaborate facades.) In other words, once the money is circulating, people simply assume its presence and value.

But that would all change if central banks begin to print money and circulate it directly instead of via commercial bank lending. For this reason, among others, helicopter money has never been an especially popular concept among elites – even as they have readied such schemes in order to shore up support for monopoly central banking itself.

The Finnish proposal will probably be disguised as a government program and that will somewhat hide the origins of the money. But people are still bound to ask questions because a "national basic income" is an intimate concept, affecting every part of one's existence. Who is paying for such a thing? Who is taking such a paternalistic interest in one's wellbeing?

Even "welfare" can be disguised as a government program. But when you are receiving a "living wage" from the government, you might be tempted to ask more questions about where it comes from.

For these reasons especially, giving people a "basic income" has been something that Western democracies have shied away from. But now, in desperation, such countries as Finland are considering it. Here's more from the ZeroHedge article:

Authorities in Finland are considering giving every citizen a tax-free payout of €800 ($900) each month. Under proposals being draw up by the Finnish Social Insurance Institution (Kela), this national basic income would replace all other benefit payments, and would be paid to all adults regardless of whether or not they receive any other income.

Unemployment in Finland is currently at record levels, and the basic income is intended to encourage more people back to work. At present, many unemployed people would be worse off if they took on low-paid temporary jobs due to loss of welfare payments.

Detractors caution that a basic income would remove people's incentive to work and lead to higher unemployment … Finnish Prime Minister Juha Sipilä supports the idea, saying: "For me, a basic income means simplifying the social security system."

Notice that the prime minister positions the basic income as just another government program. This will be part of the larger meme as any other positioning might reveal the third rail of Western democratic societies, which is the operation of the money mechanism.

But no matter how a basic income is positioned, it is yet a further step into the abyss of sociopolitical dysfunction and the gathering storm of economic ruin. Putting money directly into people's hands will likely speed its velocity and add to price inflation. More importantly, it becomes a moral issue in the way that welfare is not.

You can see a previous article of ours here, which currently has 150 comments. We made our objection clear in this paragraph:

From a philosophical standpoint, the decision is simply a moral one. Do we want to continually empower a tool inevitably controlled only by a few – called "government" – with further redistributive tactics? Do we want to create additional justifications allowing a small group to forcibly extract wealth from the larger citizenry?

Unfortunately, like so many other bad ideas, the national basic income is gathering momentum. The ZeroHedge article tells us that the Dutch city of Utrecht is planning a basic income. Switzerland, too, is contemplating the idea and a nationwide referendum on the issue is slated for 2016. ZeroHedge reports that 49% of the Swiss would currently vote in favor.

Surely expanding a destructive system is not the solution. Getting rid of central banking and other anti-freedom facilities is infinitely preferable to allowing its embrace to widen.

Modern monopoly central banking is actually a kind of genocide-in-waiting. It concentrates more and more power into fewer hands – and eventually such an imbalance is going to result in further repression, authoritarianism and the inevitable result of mass murder.

After Thoughts

All of the above provides us with yet more reason to resist these sorts of income proposals and to resolutely adopt various forms of human action to make our own existences less dependent on government resources and public services. Freedom is always the preferred solution.

Posted in STAFF NEWS & ANALYSIS
  • In the life cycle of the Leviathan they eat and grow and grow and eat. Before too long, starved of prey, they eat their own nest – eggs and all, next goes their young, soon follows any weaker leviathans and ultimately, always and without exception, they eat themselves. We can only hope when it does an egg does not drop and roll away from its grim rear end just as its last morsel of its ownself is snaffled away.

  • Goldcoaster

    while I applaud the article, I believe they will do it, and there wont be a peep from anyone. there are a lot more people who will benefit than otherwise.
    we have way too many people. we have possibly reached the limits of growth. we have automation taking more jobs.
    basically, they are going to have to do it to keep things afloat. the few that care about what it really means will be voices in the wind.
    this goes right along with the gold price suppression. its a long game, and they’ve won. I mean, if they can put Obama in the WH and stifle the TP via the IRS, I’d say its game over.

    • Blank Reg

      Why do you think people are building rockets to carry people to Mars? Time for a safety valve, not a safety net.

  • TG Molitor

    Do we want to continually empower a tool inevitably controlled only by a few – called “government”?

    For me, this is the chief reason the national basic income is a bad idea. Good article!

  • Jim Kluttz

    A related post at Casey Research today (http://www.internationalman.com/articles/weimar-greece-the-effects-of-a-currency-collapse) describes the effect of the currency collapse in Weimar Germany. The particular paragraph that seems most relevant to the current central banking nightmare is:

    “Interestingly, in 1922, virtually no one felt that currency was the problem. German politicians blamed the allies, particularly the French, for demanding that Germany live up to the treaty they had signed. Bankers often blamed foreign currencies for rising against the mark. And the people of Germany generally placed the blame on the most immediate symptom – that costs were rising more quickly than wages. Although they were pleased when their own wages went up, they wanted the prices of commodities to remain the same. They therefore blamed the merchants (particularly the many Jewish merchants) for raising the prices of their goods every time wages increased. They blamed this on Jewish greed, failing to understand that, every time wages increased, the cost of production increased and that increase was passed to the merchants.”

    There is much more, of course, farmers were robbed of their crops and sometimes murdered because they were still able to prosper. And we all know where history took Germany from there.

    I don’t know about you, but I have no evidence that the US citizenry is any better informed on the subject of money than were the Germans of 1922, or that a different outcome can be expected here in the land of the free.

  • concerndcitizen

    A friend told me she saw a scene in a dream… “a giant red shield was shattered, underneath a giant pile of huge gold coins were slipping away.” Note the German translation for red shield = Rothschild. She was unaware of that association.

  • Blank Reg

    Once again, we’ll have the spectre of “poor people trying to get in, and rich people trying to get out”. Harry Browne warned of this.

  • Praetor

    Robots do all the work and the people can play in the park, and they can do this everyday, boring. The moral question, is work really necessary, is the work ethic a thing of the past. So, we all will just read books, have hobbies, take care of more and more children, because when not going to work means more time at home and, well you see what I mean. The DB is correct. The people become exactly what TPTB conceder us to be ‘useless eaters’ that must be eliminated. I would guess, our work would end-up being war against TPTB, because the only job you can get is the elimination of the ‘Beast’. Insane!!!

    • dave jr

      Robots are the latest high tech labor reducing tools. When the wheel was invented, did Grog ask if “work is really necessary”? It is if a continuing advancement in the standard of living is desired. We are being conditioned to say “good enough” and lay down or go out and play. Meanwhile, tech advancements are falling into the hands of manipulators and we are to sob over boredom and complacency? Soon enough that won’t be an issue anymore.

    • Gil G

      So by your reasoning robots and machines are doing most of the work then the price for human labour plummets to zero. Because talk of a guaranteed minimum income is Communism most of the human race will starve to death. Some were arguing for a minimum income so people won’t starve to death in the new economy but apparently they’re jerks for suggesting it.

  • Adam

    This is just frightening. I would expect wages of basic goods and services to rise noticeably in a short period after this ‘program’ gets going.

    Why stop at $900 a month? Why not give everyone $1m and we can all quit work and live like kings? Ugh. Scary.

  • I would be most concerned about the inflation, which would neutralize the basic income at minimum.

  • dave jr

    “Even “welfare” can be disguised as a government program.” – DB
    .
    I had to back up and read that line again. This, I believe is the heart of the matter. What is welfare? It is NOT the paper coupons, but the stuff of life sustainment drudged up by human labor, that currently can be purchased by said coupons. The coupons started out as a free market created instrument of credit/debit, backed by collateral, for the purpose of facilitating trade; which could be given/taken toward ‘welfare’, when redeemed for ‘stuff’ by others less fortunate.
    .
    It is bad enough that central (monopoly) banking has commandeered the management of national currencies whereby through trickery, deceit and mind numbing, over complicated financialization, have come to manage entire economies, deficit fund government overburdening regulation, for the purpose of monopolizing control over the majority of human labor through corporate cronyism. These people aren’t stupid. They know that a government issued “national basic income” will be the death blow to free markets and to liberty in general.
    .
    But what then?
    .
    This is where I can’t get much traction on these fine web pages of the DB. What if the monetary magi feel secure enough with police states feeding out of one hand and key global monopoly corporations feeding out of the other, that they actually can dictate? What if one could not get food, energy and daily wares without specific coupons? What if one had to perform satisfactorily to get those specific coupons, since all other avenues have been cut off? Well, me thinks another grand experiment is in the making.

  • Steven Hotho

    The Nixon administration floated the idea of a guaranteed minimum income tied to something called a reverse income tax. It was quickly shelved, but there is the precedent in our own history.

  • synthetic_society

    If everyone gets an income, surely it follows that any choice and decision with regard to the size of the family must inevitably rest with the government, and cannot be made by anyone else.

    • Gil G

      Why?

      • Oddity

        The media has made him deathly afraid that there are “welfare queens” lurking around every corner, constantly producing more children so they can get a large slice of his tax dollars.

        • synthetic_society

          If you provide a UBI, we would all be “welfare queens” as you say. If the government appropriates funds, you better believe they’ll have control over your “program”.

          Media doesn’t make me afraid of people who leach off the system. People I readily observe leaching off the system in perpetuity and in violation of the rules are what concern me.

          Maybe you only live around people that are successful and thus lack perspective? Their numbers are growing, and as you so perfectly demonstrate, there isn’t much of a stigma to being perpetually dependent and essentially useless.

  • It sounds like your definition of freedom is based purely on not being bothered by anyone, so 100% freedom in that case would be floating alone in the middle of space. I think freedom involves the actual ability to do things, and that because we have all accepted the existence of private property which by definition removes something from the commons, that removal should involve a form of compensation to not hinder freedom and enable actually doing things.

    To explain further, imagine you and I are on an island somewhere. If you decide to just claim the island is yours, my freedom is restricted because I’m no longer legally allowed to exist on it without your permission. At the very least, making sure I’m able to still meet my most basic needs would be a valid form of compensation, increasing my liberty as compensation for decreasing it. That’s basic income from a freedom perspective.

    Here’s an article that goes into just what kind of freedom and liberty we currently have. https://medium.com/basic-income/its-time-we-take-a-closer-look-at-americas-three-favorite-words-f512f8a1ad6f

    I’m also curious about something. Just what is your solution to our future of automated employment? We’re already seeing the effects of technology, as jobs move from decades long and full-time to part-time, temporary, contingent, gig labor, with zero-hour contracts, just what do you think is the best way to go about that kind of labor market? Would you like people to fill out a form for every job, or every task? Do you want to help people who are unemployed but then remove that help when they find employment?

    Seriously, what’s your solution? Yeah, I hear you love freedom, so how do you envision that in the year 2025 where millions of drivers have been put out of work by self-driving vehicles and millions more are considered useless and far more expensive than various forms of AI? Let’s hear details. How will you enable greater freedom? By what method? By getting rid of all taxes and the government itself? What will that do?

    Have you considered the freedom inherent in the ability to tell any employer “No, I won’t work for you at that wage because I don’t have to in order to live?” Have you considered how a basic income makes eliminating the federal minimum wage possible? (http://www.huffingtonpost.com/scott-santens/minimum-wages-vs-universal-basic-income_b_7957850.html)

    I believe in real freedom, and that’s what basic income makes possible. Without it, we are all at the whims of those who own property, property that was all claimed by someone’s heirs long ago.

    • What you want is the sort of freedom to take money from other people by the use of violent force – correct?

      • Raoul

        I don’t think we need to take money from anyone! People can keep their sheets of paper for as long as they want. I would however, like if we diminished the value we grant those sheets as society, based on the printing date. For example 10% a year (gradually, you’d have to scan the serial number to get the real value of the bill, everyone’s gonna run around with scanners they had to buy for 5 bucks…)(so ~19% less on the second year, and so on).

        There’s no violence involved in the mass of all people who are required to do business in a given currency, deciding what the sheets of paper they have to accept for their services, are worth.

        • I will make it simple for you. You want a ‘basic income’ – where is that going to come from and how are you going to collect it?

          • Gil G

            So if the new economy only needs 10% of the current population that mean there’s going to be 90% unemployment rate. So these people are now left to starve because human labour is no longer a marketable commodity?

          • There are a million and one more things that could be done in the world which are left undone. I would like to employ a gardener, a spoken Japanese teacher, a book-keeper, etc and then I can work offering whatever skills I can carry-out efficiently for the same amount of time they work for me. The difference is that if I did the gardening, the study, the accounts, by myself for myself, I would spend more time in doing so than the experts need to spend; so contracting is a cost benefit to me. Sounds simple but this does not work out like that because the exchange is subjected to taxation and enforced bureaucratic overheads (eroding the balance of cost/benefit).

            The existing economy is much like the agricultural economy before mechanised agriculture. Labour became too expensive to have some old peasant tilling sods so the farmer mechanised and the factory owner used the labour force (where the cost/benefit corresponded). Now the factory owner is mechanising and the labour force will deploy into new functions for which the demand is no more realised than the labour requirement’s of industrial production was in 1775.

            If you look at the UN plans for what will happen to what they calculate as being the excess population you will see they are actively working towards a dramatic manufactured population reduction. In a scientifically planned Technocratic society the self-appointed ‘elite’ class will judge they need but a very few slaves to graft, be romantic artisans or picturesque peasants because, once you own and control everything, why would you want that lot fouling the place up?

          • Raoul

            As I said, I’m for decaying the value that money has periodically, creating a net value loss if you add all existing currency token values together. It’s basically a tax on the value of money we grant it as society. But that value is a value constructed purely by all members of society at large anyway, so I see no issue in that if society decided that it is for the best that way.

            Filling the gap in value with newly printed currency tokens then could be used to finance a basic income, if the individual members of society, at large, agree to accepting such currency tokens that were simply paid out to everyone for existing. That’s the key question, not from where ‘money’ is gonna come from. Now with regard to that question, feel free to come to your own conclusions!

        • db

          This literally happens today via inflation. It is a natural consequence of creating money. All you have to do to increase the devaluation of currency, is print more currency.

          • Raoul

            The only problem with inflation is that there’s incentive to interpret inflation just a tad bit too low to sell more state bonds, while this has negative consequences for wages. Plus inflation is very different for different products.

            Just edicting a specific rate via a predecided loss of value in the currency tokens makes things a lot more transparent.

    • dave jr

      If I were a third person on your metaphorical island, I don’t know what thought process I would consider more evil. The claiming of ownership over the islands resources in order to seek unearned royalties, or the claiming of ownership over me in order to seek unearned compensation for merely existing. Both economic views require enforcement and threat of violence, conquest through war, for its implementation. Both strangle the free market goose that lay the golden egg. I don’t know what the “solution” is, this far into captivity. But I do know that a defeatist attitude of surrender is not it.

    • nck

      In my opinion, freedom is not something that one can prescribe, since by its very nature, it means each person being regarded as innately having the right to act as they please as long as whatever they do does not violate the legitimate “rights” of others to their bodily safety( right to defend themselves), their possessions (private property), their shelter (home) and their ability to move around without restrictions (freedom of movement).

      It means there can be no “laws” imposed upon anyone. Each person would have the right to live by the values he deems best.

      This will still require some over-riding authority with the power to arbitrate disputes.

      Fortunately such system already exist under religious laws, and many submit themselves voluntarily to them and can be held accountable to them by their peers.

      For those with no such basis of law, one would have to be adopted, such as “common law” for example and in the event of a dispute between persons who submit to different sets of rules (“laws”) a rule must exist as to which would apply.

      I would suggest in the case of crime, the law followed by the victim should be applied, while in a civil dispute, the law of the defendant should be given precedent.

      Under such a system there is almost no power in the control of the organisation that takes care of the day to day running of essential services – such as water supply, national defence etc, the functions we normally attribute to the State, and which comes at the price of becoming an asset of the state in all its ramifications, including, in real terms, the abdication of all power and right to determine ones own destiny.

      True freedom implies that in ones own property one is as close to God on earth as can be as far as authority is concerned and even agents of the state administration may not violate ones privacy without consent of the “owner”. Currently the state is ultimately owner of everything which allows the state, under certain safeguards which today appear to have evaporated, to violate ones privacy and “ownership” as it sees fit.

      To be truly free requires a set of rules to which people may voluntarily submit themselves, and which is inviolate, which is perpetual, which is unalterable and which applies equally to everyone without exception. Without this basis, there can never be true freedom and everyone is a subject to the one who has secured the power to determine the law, in effect, the god that everyone must obey.

      In the end, if we wish to remain a part of a larger grouping, the only substantive choice we have , is in deciding which god/God we will subject ourselves to, and the god we choose will determine the range and scope of our freedom to be ourselves. But when we allow an institution (the state) to own us totally, any talks of freedom, without tackling the subjugation we are under, is an exercise in futility.

  • Bruce C.

    The concepts of “anti-usury” and “unconditional basic income”mentioned in the previous DB article that was linked were simply wealth redistribution systems paid for by citizen taxes. “Helicopter money” is significantly different because the “money” involved is not only created “out of thin air” but is not backed by debt.

    As the DB writer(s) point out “ordinarily” government deficit spending (i.e., spending in excess of that received by taxes) is borrowed by issuing government bonds. Actually what happens is primarily dealer banks loan the government whatever it wants and books the loan amount as an asset – a Treasury bond in the case of the US. Most of that money (about 97%) is created “out of thin air” by the magic of fractional reserve lending but it is at least “backed” by a bond which means the “money” must be returned/paid-back with interest. However, in the case of “helicopter money” the created “money” is not backed by any bonds and only a “central bank” can do that. Money/currency can be simply created (digitally or physically) without any corresponding bond backing. In other words, the money/currency never has to be paid back and so it simply exist indefinitely as part of the monetary base. That may sound like money for nothing – and it may seem to be initially – but it simply means all fiat paper currency gradually devaluates. In the meantime, everything can appear normal in the financial markets because there would be no increase in debt/bonds to detect any imbalances. Instead, some combination of savings/investments and consumption would suddenly appear. I’ll leave it to the reader to speculate on whether or not consumption would increase more than savings/investments. In either case, price inflation would increase because of the new found windfalls.

  • nck

    “But when you are receiving a “living wage” from the government, you might be tempted to ask more questions about where it comes from.”
    Not in my experience.
    Most recipients of State grants couldn’t care less where it came from as long as they got their “due”.
    Being recipients of “something for nothing” is almost guaranteed to get them all supporters of the system and they will do anything to defend its continued functioning.
    I cannot see recipients choosing freedom as “the preferred option” if it meant losing their stipend.
    Work has produced such little to cheer about, with most people burning both ends of the candle and still unable to make ends meet. Work holds no glamour or joy anymore, it is a trudge,an imposition, something to escape from by any means. many will choose the stipend and cease working altogether if their groups collective stipend would allow it.
    I can see it being widely supported.

    • I guess inflation would gobble-up whatever value it appeared to first offer and so the living basic would have to up and up too until it became demonstrably the unsustainable stupid idea it clearly is in the first place and imploded in a general economic collapse.

  • dave jr

    For a ‘national basic income’ to be sustained, it logically follows that price and wage controls would eventually need to be implemented. From each according to his abilities, to each according to his need; Marxist style. Then further, with incentive to produce laid waste, job placement (forced labor) would be next. Only then would the collectivized dummies stand up and scream for their rights after having trashed the rights of their producing brethren. Worst still, any crackdown will cause them to go on a looting and pillaging rampage effectively crapping in their own drinking water. All according to the authoritarian plan.

  • Nexusfast123

    No, central bank interventions are the last gasp of a failing capitalist system.

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